Griffin v. Orman , 9 Fla. 22 ( 1860 )

FORWARD, J.,

after reading the statement prepared by him, proceeded to deliver the opinion of the Court.

It is contended by the counsel for appellant, and conceded by Mr. Bush, one of the solicitors for.appellee, that the first error assigned, which is, that the decree should have been in favor of the respondent in the Court below instead of the complainant, opens the entire record for the consideration of the Court, and renders necessary an examination of this cause upon its merits, and the cases of LeBaron & Colquitt vs. Fauntleroy et al., 2 Florida, 276, and Life Ins. and Trust Co. vs. Cole, 4 Fla., 362, are cited to maintain this position.

Were this cause now for the first time before a Court of Appeal, these (¡ases would be conclusive, under the act of February 10th, 1832, which gives authority to the Appellate Court to pronounce “ such ¿judgment, sentence or decree as the Omrt below ought to hme given! An appeal, in equity is substantially a re-hearing of the cause, and the appeal opens the whole case as it is presented in the record, or it opens for consideration all prior or interlocutory orders or decrees connected with the merits of the final decree. But this case has once been acted upon by an Appellate Court, and in consequence thereof we are involved in some difficulty in determining how much of the case is opened by this appeal.

The first question presented by the statement of the case, as appears by the record and proceedings, is this: Is the decision of the Court of Appeals of the Territory of Florida, given at January term, 1838, upon an appeal then pending from an order in this cause, obligatory upon this Court, so far as to eonfine-ihis Court to a review of proceedings subsequent to the mandate of that Court, or whether this Court can go behind that mandate and the decree of the Superior Court affirmed, and render a decree according to its own view of the merits of the case ? This leads us to inquire how the decree of 1834 by the Superior Court, and the decree of the Court of Appeals of 1838, affirming in part said decree, are to be viewed. If they are together a final judgment in the cause, then this Court will be estopped from going behind the mandate of the Court of Appeals, however much wo may differ as to its provisions. Bret vs. Ming, 1 Florida, 454.

In determining whether these two decrees are together a fi/nal decree, we are led, from the view which this Court takes of them, to inquire:

1st. Whether the Com-t of Appeals in 1838, under the laws then in existence, had jurisdiction of the cause, and whether their adjudication is not altogether corcvm non judiee.

2d. Whether, admitting the Court of Appeals had jurisdiction, their decree, together with the decree of the Superior Court, is anything more than an interlocutory decree, and examinable by this Court like all other interlocutory decrees, and whether the last decree (that of Judge Douglas) in this case was the final decree.

In examining the first question it will be borne in mind that when that appeal was taken there was no statute of Florida authorizing appeals from interlocutory decrees as there now is, but the law was: “ That if a party in either of the Superior Courts of this Territory shall feel aggrieved by a final judgment, sentence or decree, made or pronounced, by emy or either of send Courts, it shall cmd may be lemful for such party, dec., to obtain an appeal to the Court of AppealsC &e. See Duval’s Compilation, page 108.

From this it will be seen that to give the Court of Appeals jurisdiction and give their acts validity, it was necessary that the decree of the Superior Court appealed from .should have been a final decree.

What is a “final decree?” Blaekstone, in his Commentaries, says: “ It very seldom happens that the first decree can be final,' or conclude the cause.” In speaking of things which retard the completion of decrees, he says: “ Frequently long accounts are to be settled, incumbrances and debts to be inquired into, a hundred little facts to be cleared up, before a decree can do full and sufficient justice. These matters are always, by the decree on the first hearing, referred to a Master in Chancery to examine, and then he is to report the facts, as they appear to him, to the Court. This report may be excepted to, disproved and overruled, or otherwise is confirmed and made absolute, by order of the Court.” 3 Black. Com. page 353.

“ A decree is final when all the circumstances and facts material and necessary to a complete explanation of the matters in litigation are brought before the Court, and so fully and clearly ascertained by the pleadings on both sides that the Court is enabled from tiience to collect the respective merits of the parties litigant, and upon a foil consideration of the case made out and relied upon by each, determines between them according to equity and good conscience.”

“ A decree is interlocutory when it happens that some material circumstance or fact, necessary to be made known to the Court, is either not stated in the pleadings or so imperfectly ascertained by them, that the Court, by reason of that defect, is unable to determine finally between the parties ; and therefore a reference to or an inquiry before a Master,” &c. 1 Harrison’s Ch. Pr., page 420.

“ But a decree is final, in the sense of the rule, which finally adjudicates upon all the merits of the controversy, and leaves nothing further to be done but the execution of it.” Story’s Equity Pl., § 408.

.It is said by Judge Spencer, in Jaques vs. Methodist Episcopal Church, 17 Johnson, 558, that no case can be found in which a decree directing a reference to a Master, or a feigned issue, for the purpose of ascertaining any material fact in. the case, has been held to be a final decree.

A decree to refer is not final. There must be a report; and a final decree upon it. 10 Vesey, 34; 2 Cranch, 33.

It is true the decree of the Superior Court does not direct the Master to report; but it does reserve questions until the coming in of the report; to wit, the disposition of so much of said sum and amounts as have not been paid. But does this dispense with the necessity of a report or confirmation of the report?

It seems it was thought necessary to have a report and confirmation of it, as Judge Douglas required, before he would enter a final decree in the Circuit Court.

This reference to the Master was not merely to calculate ■ interest or state an account upon fixed data. On the contrary, he was to “ ascertain the amount still due and unpaid,. with the interest thereon, up to the date of this decree,., and all swns due and owing Toy said complainants as aforescdd, contracted before tiie 14th January, 1829.” lie was also to ascertain “tlie amounts p<dd under the judgment of the County Court and in said Justice Hogg’s Court.”

If this is not a reference for the purpose of ascertaining material facts, we are at a loss to define what would be one. If the report of the Master, on ascertaining these facts, does not require confirmation before final decree, we cannot conceive a case that would require it. Again, from what source was the Master to ascertain “ the amounts so pcdd wider judgments of said Court,” &c., &c. ? "Was he to gather this from the pleadings? "Were these facts “fully and clearly ascertained by the pleadings on both sides, that the Court was enabled from thence to collect,” &c. ? No. It does not appear from thepleadings that any debts were paid by said Orman & Young. On the contrary, their payment was made after the original bill was at issue, and' was made known to the Court by proofs and not by pleadings. Being imperfectly ascertained, the Court referred the cause to a Master.

It follows as a matter of natural consequence that the Master was to make special report of these things to be confirmed, before a final decree, and it certainly is the practice. See 2 Smith’s Ch. P., 359.

In Scott vs. Livesey, Eng. Chan. Rep., vol. 1, 467, it is laid down that wherever exceptions will lie to the Master’s report, it must be regularly confirmed before any order can be made upon it. A report approving a conveyance after order for sale is the only exception.

This decree further directs that the partnership property received by said Sewall, or which was purchased or acquired with the partnership funds, (not stating in the decree any property, real or personal, thus received or acquired,) be in the first instance applied to the payment of the sums decreed. Execution is by the decree awarded to the complai/ntvnts, and directed to be levied on said property, (no where specified or described,) so as to raise tbe amount due complainants (wlien ascertained.)

We are aware of the length to which the Supreme Court of the United States has gone, in defining the properties of a final decree, so as to admit of an appeal, and some of the provisions of this decree import fro tcmto finality, according to those tests. But when we consider that material facts were referred to the Master to ascertain; that the further order of the Court is reserved, and that the decree does not specify the property, the rem, to be sold, on which the alleged lien did attach, it will be seen that those tests will not work this into a pro tcmto final decree. Young et al. vs. Smith et al., 15 Peters, 287. The decree was incapable of execution without some further action- of the Court. Could the Court of Appeals have pronounced a final decree in the cause before it ? It certainly could not, and it did not, as will be seen by reference to it. Although they provided for execution and sale, no property was specified, and they sent the case back to the Court below, with the same reference to Master as to amounts paid; and in the opinion of the Court of Appeals — see page 100 of printed record — the Court say:

“ The Master should have been directed to make his report to the Court, so that the appellant might have had an opportunity of taking such exceptions to it, if any there were, as would have been legal and proper before a final decree was rendered upon which execution would issue.”

In the case of Putnam vs. Lewis and wife, 1 Florida, 474, our own Court decided a decree for partition of land, which was made by consent, and all the equities between the parties settled, the quantity of land each claimant was entitled to defined, but which appointed commissions to make partition of the land in conformity thereto, to be an interlocutory decree. That case does not present equities unsettled and material facts, unascertained, as does the one we are now considering. See also Bellamy et al. vs. Bellamy, 4 Florida, 243.

Tims it will be seen that neither our own nor any of the other decisions would sustain us in holding the decree of the Superior Court in 1834 a final decree. It not being a final decree, the Court of Appeals acted prematurely, and the cause was never properly in the Court of Appeals.

Supposing, however, the Court of Appeals had jurisdiction, what is the character of their decree? "Was it a final or interlocutory decree ? From the rules and tests we have already laid down, there is no question but that it was an interlocutory decree, continuing the reference as to specified portions thereof affirmed, and calling for the report of a Master, confirmation thereof and. entry of final decree thereupon by the Court below.

As the case is now up again before a Court of Appeals, can this Court revise and reverse the former ruling of the Court of Appeals ?

We have already decided that there has been no final decree in this cause, excepting the one now appealed from, to wit: the decree of the Court in 1846 by Judge Douglas.

This Court, having jurisdiction of the cause, on an appeal, and there being no final judgment, the whole case is open for consideration on the merits connected with the decree from which appeal is taken, and this, too, notwithstanding the interlocutory decree of the Superior Court was in part affirmed by the Court of Appeals, which was done in the case of Price, Executors, vs. Nesbit, 1 Hill’s Chancery Reports, (South Carolina,) page 454, under principles cited in said case, and also in Jaques vs. Methodist Epis. Church, 17 Johnson, 549.

Having decided that the opinion of the Court of Appeals, and its decree in 1838, is not obligatory upon this Court, and that the last decree (that of Judge Douglas) in this case was the final decree, the next question is "whether there was error in the preceding interlocutory decrees connected with the merits of the final decree.

By the partnership articles, Orman & Young and Sewall agree to enter into partnership for two years in the mercantile line. The business to be done under the name, style and firm of “ Orman & Young.”

Of course, under this agreement, all contracts by and with the firm, within the legitimate sphere of their business, although under the name and style of Orman & Young, Se-'wall, the dormant partner, is bound for and liable at law, if he shares the profits thereof. 9 Pickering, 272; Livingston vs. Roosevelt, 4 Johnson, 267; Beckman vs. Drake, 9 Meesen & Welsby, 92; Saville vs. Robertson, 4 T. R., 725; Armstrong et al. vs. Hussey et al., 12 Sergt. & Rawle, 317.

It appears in this case that the contracts and notes were made in the firm name, “Orman & Young.” Therefore Sewall could be joined with the acting partners in an action at law, and the plaintiff could aver in his declaration that Orman, Young and Sewall composed the firm of “Orman & Young.” Loyd vs. Ashby, 2 B. & Ad., 23; 5 Peters, 562.

If Orman & Young, on being sued alone, desired to have Sewall joined with them, they should have plead the nonjoinder, as was their duty. — 11 Richardson’s Law Rep., 484.

There are conflicting rulings whether the acting partners alone being sued on a note, could plead the non-joinder of the dormant partner; but where he was known to the creditor at the time of the contract, there is no question but that a plea in abatement would be sustained, because he put faith in him also.—Dubois vs. Subert, 5 Taunt, 609; DeMautort vs. Sanders, 1 B. & Ad., 398.

Orman & Young having suffered judgment against themselves alone, and the creditors, with the knowledge that Se-wall was a partner, having taken their judgments in this manner, the recovery should be treated as a recovery on a several contract, and not as a bar to Sewall.—6 Cranch, 253; 11 Richardson, 484.

Was there anything to inhibit the creditors from suing all the partners at law ? — Sewall was bound in extemo as well as Orman & Young. Was there anything to prevent them from suing Sewall even after their judgment 1 — A judgment against the two partners, Orman & Young, would be no bar to an action against all three of the partners.

In the late case of the Union Bank vs. Hodges & Smith, 11 Richardson’s Law Rep., 480, assumpsit was brought on a note, signed “A & B,” payable to their own order, and endorsed by them, and judgment recovered. Afterwards, the plaintiff finding that 0 was a dormant partner, sued all three upon the note. A & B pleaded a former recovery, but the Court of Appeals overruled the plea.—See, also, Sheehy vs. Mandeville, 6 Cranch, 253; Watson, Crews & Co. vs. Henry Owens & Co., 1 Richardson’s Law Rep., 111.

There is no allegation or proof that any of the members of the firm was insolvent at or since the institution of the suit; and suppose any or all were insolvent, still they could be sued at law and the creditors could not enter the Court of Chancery till they had first obtained a judgment at law and got a return of mulla bona on the fi. fa. Yet, by the decree in this cause, Orman & Young are substituted for the creditors and given a standing in equity against Sewall, reaching his property which they had sold him, a position that the creditors themselves could not have maintained, enforcing judgments against Sewall to which ho was not a party, giving as' a reason for this substitution that, although Orman & Young took the bond of Sewall, with security, to pay the debts of the firm, nevertheless Orman & Young were sued alone by the creditors and paid debts under the judgments, and that no recovery could be had against the secret partner Sewall at law by the creditors.

But, it- is contend eel by counsel for appellee that the creditors had a lien upon the partnership property and the property purchased with the funds of the firm for the payment of their debts. What lien had they ? When they sold goods to the firm of Orman & Young and delivered them, their lien was gone, the contract was executed on their part, and just as soon as Orman & Young gave their note or promise^ it was complete on their part — nothing remained but to pay the money. And who was bound in law to pay it? The firm,- Orman, Young and Sewall. They had, when they recovered judgment, a lien upon any property which was subject to the execution thereupon, the same as any other person on judgments for property sold, but they could not reach property in equity until they had exhausted their law process. The creditors had nothing to do with the bond given by Sewall to Orman & Young. That was Orman & Young’s indemnity — their seeivriiy. That security could be enforced by them.

In view of the facts, what was this substitution? It was substituting Orman & Young in the place of the creditors against Orman & Young — certainly an anomaly. To do what? To use the executions of the creditors of the firm issued upon judgments in which Sewall' was no party and subject the property sold by them to Sewall in payment thereof. The facts of this case do not warrant any such subrogation or substitution. It is inapplicable. The equitable doctrine of subrogation or substitution can only be resorted to, says Chancellor Walworth, “in cases where the person advancing money to pay the debt of a third party stands in the situation of a surety, or is compelled to pay it to protect his own rights, that a Court of equity substitutes him in the place of the creditor as a matter of course without any agreement to that effect.”—Sanford vs. McLean, 3 Paige, 117; 40 vol. Law Library, pages 92, 101.

In what way did Orman & Young stand as surety for Se-wall with the creditors? Whose creditors were they ? Were they not the creditors of Orman & Young? Did they advance money to pay the debt of Sewall? No, they advanced money to pay their own'debt as well as Sewall’s. It is true that Sewall had agreed,with them, Orman & Young, to pay these debts, and given his bond and security to that effect, but no arrangement had been made with the creditors. They had not taken him as principal and Orman & Young as surety. Ye have already seen that nothing in the pleadings and proof show that they were compelled to pay the debts to protect their own rights. Had they plead the non-joinder of Sewall in these suits, they would have had Ms property equally liable with their own; or, as they paid debts, they might, by suit for breach of the bond, have attached Sewall’s property. Had Orman & Young taken no bond or promise from Sewall that he would pay the debts, then, on payment, they would have been entitled to contribution; but they sold and delivered the effects of the concern to Sewall, and took his bond and seov/rity, and executed a conveyance with warranty against their claim. The effects by the sale became Ms, and he could dispose of them as lie thought proper.

The creditors are not parties to this suit. There is no allegation that either Sewall or Orman & Young are insolvent, nor are the creditors seeking to show collusion or fraud, yet the Court substitutes Orman & Young for them and fancy that the creditors had and have a lien on the partnership property notwithstanding the sale to Sewall.

This leads us to consider the doctrine of the creditors’ so called lien on partnership effects. During the continuance of the partnership the joint creditors have no lien. The nearest they approach it is a right to sue at law and subject the property.—Ex parte Ruffin, 6 Ves., 126; 11 Ves., 5.

But until then they cannot prevent the partners from effectually transferring the partnership property by bona fide sale, and if sold bona fide, joint creditors cannot follow it. Campbell vs. Mullott, 2 Swanston, 576; 10 Vesey, 347; 1 Maddock, 533.

Tlie Master of the Rolls, in delivering his opinion in the case in 2 Stwanston, says: “ The circumstance of its having been joint property does not render it such forever, or prevent its being effectually aliened to two or one of the partners This is the case now under consideration. See this doctrine summed up in Story on Partnership, sections 358, 359, &c.

In section 359, says Story: “The reason is, that in such a case the retiring partner who so transfers his share has no lien on the property for the discharge of those debts; for, by his voluntary trcmsfer thereof he has parted with it and trusted to the personal seciority ct/nd personal contract of the other partners.” And in section 360 the commentator says: “And it is thus through the operation of administering the equities between the parties themselves that the creditors have the opportunity of enforcing this quasi lAenP Thus it will be seen their agreement will be enforced according to the equities between the partners. This is irrespective of any provisions of the statute of King James.

It is contended by the counsel for the appellee in support of the decree that said Orman & Young had an equitable lien upon the partnership property for the amounts which they paid for the firm, and therefore the misapplication of the principle of substitution to this case is not fatal to the decree.

There is no doubt, as a general principle, that each of the partners have a specific bien on the partnership stock not only for the amount of his share, but for monies advanced by him beyond that amount for the use of the co-partnership,, and that this lien extends to property purchased with the partnership funds as well as that standing in the partnership name.

This lien would be enforced if the partners had not entered into an agreement that the partnership stock should become the exclusive property of one of them (Sewall), and that Sewall should pay all the debts, and for security that he would do so, an indemnity bond taken. Lingen vs. Simson, 1 Sim. & Stu. Rep., 600.

It will be borne in mind that the partnership property was not left in the hands of Sewall to pay the debts with, he assuming a trust. On the contrary, the same is tona fide sold to him. A conveyance to him is executed by Orman & Young, in which they covenant to warrant and defend him against their claim. The partnership is dissolved — a final settlement made — a sum of money paid — an agreement entered into between the partners, in which the creditors are not parties, that said Sewall, as a part of the purchase money, will pay all the debts, not specifically out of the partnership property, but that he would pay them, and as an indemnity against their suffering damage, he executes a bond with security. The fact of taking this bond, with security, and the fact of the other party covenanting to warrant and defend against their claim, seems to us conclusive that it was the intention of the parties that the effects assigned to said Sewall should be appropriated to his primate use. Orman & Young admit this in their answer to the cross bill. They say that if they had known how much embarassed Sewall was they would not heme sold to him.

The case of Deveau vs. Fowler, 2 Paige, 401, cited by counsel for appellee, is a strong case, and at first view would seem to clash with the English decisions and Judge Story, that an assignment of the partnership effects- by one partner to another is a destruction of the lien. And so with some of the other cases cited. But it will be seen that all the Chancellor decided in that case was, that the partnership property should^ be applied in the manner stipulated in the agre&ment, and in the opinion the language of the Chancellor is: “ The fair presumption, in the absence of any express agreement to the contrary, therefore is, that it was not the i/ntmtion of the complainant that the effects assigned to the defendant should be appropriated to the private use of the latter, leaving the debts of the firm unpaid.”

In the case of Yendor’s lien, where se&writy is taken, the presumption of law is that the vendor waived Ms lien, and relied on the security, and so it has been held by our Court. See Marvin vs. Bradford, Admr., 2 Florida Rep., 463. So in this case, the taHng of se&writy must be presumed a waiver of the lien, or at least an expression, jprima fade, of the intention that the effects assigned should be appropriated to the private use of the purchaser.

The weight of authority seems to be, in America as well as in England, that partners may effectually transfer their joint property to one another by Iona fide sale, and that such a sale destroys the lien.

We tMnk in this case that Orman & Young did make such a sale to said Sewall, in consequence of which the property is not still the property of the partnership, and therefore the decree is erroneous, and should be reversed and set aside.

The appellant, by his attorney, claims that the decree in the Court below should have been for defendant, dismissing complainant’s bill.

This objection to the jurisdiction of the Court comes too late, in any event.

The appellant' submitted to the jurisdiction of the Court by answering the bill, filing cross bill, and then moving to dissolve the injunction. He should have demurred to the bill, if he wished to contest the equity in it. Grandin vs. LeRoy, 2 Paige, 509; 2 John. Ch., 339; 4 John Ch., 287.

We think, however, the Court did not err in retaining the bill, irrespective of the fact that it was answered.

What was the nature and objects of this bill? It was a bill of q%da timet, and for specific performance of an indemnity bond.

Blackstone, in his Commentaries, says a Court of Equity may entertain a bill of qwia timet for the purpose of preventing a possible future injury, and thereby quieting men’s minds and estates, &c. 3 Black. Com., 331; 2 Story’s Equity Jurisprudence, § 826.

And in the case of Champion vs. Brown, 6 Johnson’s Chancery, 406, it was decided that equity may decree the performance of a general covenant of indemnity, though it sounds only in damages. 1 Fonblanque, 43, and note, also, see Ranelaugh vs. Hayes, 1 Vernon, 189; 4 Dessausure, 44.

What is a covenant of indemnity ? In 2 McCord, 279, the Court define “ indemnity” to be “ what is given to a person to prevent his suffering damage.”

We think the bond in this case contains a general covenant of indemnity, and sounds only in damages, and comes within the jurisdiction of a Court of Equity, and unless the bond is set aside or cancelled, the Court below, under this bill, should decree a specific performance thereof, and in enforcing the decree may execute it on any property belonging to the estate of Sewall which may be found applicable for that purpose. We think that there is enough stated in the bill to call upon the defendant to answer.

We are also of the opinion that the Court below erred in sustaining the plea to the cross bill and dismissing it.

This cross bill was filed for the express purpose of relief against the bond and agreement which is endeavored to be enforced by the original bill. It charges fraud, concealment, misrepresentation and imposition on the part of the obligees. Its prayer is that the bond be annulled and given up, and the agreement entered into between them for the adjustment of the partnership concern be set aside and held for naught,

Chancery may order an instrument to be delivered up to l)e cancelled, whether it is or is not void at law, and whether it be void from matter appearing on its face, or from proof taken in the cause. Hamilton vs. Cummings, 1 John. Ch., 522, and cases reviewed.

The grounds upon which a Court of Equity will grant relief against agreements and bonds founded in fraud, imposition and misrepresentation, aro well defined in all our textbooks. We are at a loss for what reason the Court below refused to enter into the enquiry presented by the cross bill, answer thereto and proofs taken under the same, and sustained the plea setting up the very bond and agreement, against which relief was sought, as an estoppel.

This case of antigmby has dragged its length through a series of judicial changes, and gladly would we arrest its career, but we think the ends of justice require that the cross bill be reinstated, the judgment of the Court below sustaining the plea of estoppel vacated and the cause remanded to the Court below, to enquire from the proofs taken or to be taken in the canse whether the relief prayed for in said cross bill should be granted.

Under the general powers granted by the Legislature, this Court might upon the record make such a decree on the original bill, cross bill and supplemental bill, which arc sdt down for hearing 'together, «as the Court below should have made, but it is to be considered that the Constitution of our State makes us an Appellate Court onl/y. The Court below not having passed upon the relief prayed for in the cross bill, we think it 'would be exercising a doubtful jurisdiction for this Court to act upon it until that is done. Besides, the parties may now desire to take further testimony. The Court below might, upon application, if thought proper, open the case again for further testimony.

If, upon a hearing of the cause below, the Court should he of the opinion the agreement should be annulled and the bond delivered up to be cancelled, then it will be a matter of account and contribution between the partners.

If, however, the Court below should refuse the relief asked in. tbe cross bill and sustain tlie bond and agreement, then it will treat it as a bond of indemnity sounding in damages, and decree a specific performance directing a reference to a Master to tax tbe damages and decreeing tbe administrator of said Sewall to pay tbe same within a reasonable time out of assets of the estate of said Sewall in his hands to be administered. '

The decree of the Circuit Court is therefore reversed and set aside, and this cause remanded to the Circuit Court of Jackson county for such farther and other proceedings and decree as that Court shall deem right and proper, according to the principles of equity between said parties, conforming in said proceedings and decree to the instructions and principles laid down and established by this Court in said cause, and that the appellant recover of the appellees his costs herein expended.

And it is further ordered that the Clerk of this Court do prepare a transcript of this judgment, duly certified under his seal of office, and that he forward the same to the Deputy Clerk of this Court at Marianna, with instructions to enter the same on the minutes of the Court at that place as of the March term, 1860.